What changed in PSQ Holdings, Inc.'s 10-K — 2022 vs 2023

Item 1. Business Unless the context otherwise requires, throughout this Annual Report on Form 10-K, the words “PSQ,” “PSQH,” “we,” “us,” “PublicSquare” the “registrant” or the “Company” refer to PSQ Holdings, Inc. and its subsidiaries (as applicable). On February 23, 2023, PSQ completed a stock-for-stock transaction to purchase 100% of the outstanding shares of EveryLife, Inc.

(“EveryLife”), a Delaware corporation, in exchange for 1,071,229 shares of common stock, par value $0.001 per share, of Private PSQ (“Private PSQ Common Stock”). On July 19, 2023 (the “Closing Date”), we consummated the transactions contemplated by that Agreement and Plan of Merger, dated as of February 27, 2023 (the “Merger Agreement”), each by and among PublicSq. Inc.

(f/k/a PSQ Holdings, Inc.), a Delaware corporation (“Private PSQ”), Colombier Acquisition Corp., a Delaware corporation (“Colombier”), Colombier-Liberty Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Colombier (“Merger Sub”), and Colombier Sponsor, LLC (the “Colombier Sponsor”), a Delaware limited liability company, in its capacity as purchaser representative, for the purposes set forth in the Merger Agreement, which, among other things, provided for the merger of Private PSQ into Merger Sub with Private PSQ surviving the merger as a wholly owned subsidiary of Colombier (the “Business Combination”).

At the closing of the Business Combination (the “Closing”), Colombier changed its name to “PSQ Holdings, Inc.”. Our Business We are a values-aligned platform where users with traditional American values can connect with and patronize business members whose values aligned with their own. Users are able to search for and shop businesses offering products and services both locally and online.

The PSQ platform is accessible through the web and mobile devices. Since our nationwide launch in July 2022, we have become the largest values-aligned platform of pro-America businesses and consumers. Our Values We are passionate about our mission and that passion guides everything we do.

We believe that the Platform is the leading widely accessible repository dedicated to empowering like-minded, patriotic Americans to discover and support companies that share their values. As a company, we strive to connect consumer members with a wide selection of values-aligned and patriotic business members from a wide variety of industries.

In order for a new business to join the Platform, a representative of that business must agree that the business will respect the following five core values (the “ five core values ”) that we strive to uphold and promote within our community: ● We are united in our commitment to freedom and truth — that’s what makes us Americans. ● We will always protect the family unit and celebrate the sanctity of every life. ● We believe small business members and the communities who support them are the backbone of our economy. ● We believe in the greatness of this Nation and will always fight to defend it. ● Our constitution is non-negotiable — government isn’t the source of our rights, so it can’t take them away.

These five core values are the foundation of our Company’s vision, which connects the consumer members and business members who use the Platform to promote their voice through their purchasing power, or ‘vote with their wallet’.

The Platform We are free-to-use for users, who can use the Platform to search for and shop from values-aligned business members both locally and nationally. The types of business members found on the Platform currently include, among others, retailers and other merchants, restaurants, banks and other service providers.

The PSQ platform (the “Platform”) can be accessed through two primary means: ● Mobile application — Our mobile app is available for both iOS and Android-based devices. ● Web — Users can access the Platform at PublicSquare.com. 1 Business owners from a wide array of industries, offering a myriad of products and services, can host their business listing on the Platform directory at no cost.

Users using the Platform can then identify and patronize these business members. Users are able to review our five core values on the Platform. By accepting the terms and conditions of our application, business members confirm that they have reviewed our five core values and affirm that they will respect these values.

We believe that having our business members confirm that they respect our five core values, helps ensure platform mutual trust in order to drive consumer and business satisfaction and retention.

We ensure that our business members respect our five core values by having our team routinely review business member profiles and other advertising materials and content on the Platform to ensure that they do not upload any content that we believe does not respect our five core values.

Users are encouraged to send reviews and report to our support team if they come across businesses who should be considered noncompliant in relation to our values.

When we find noncompliant business members who do not support our five core values, we confirm the validity of the feedback and determine the best course of action with the business member, which may include contacting the business member directly, or removing the business member from the Platform.

When joining the Platform, business members upload their respective profiles to be included in the Platform directory at no cost. In addition, they can advertise their services on the application platform, which increases their exposure to the consumer members in our network, for a monthly fee.

They can also sync their products in order for users to purchase their product on the app. For users, our user-friendly app provides different tabs where they can find both local and online business members. The Platform categorizes products and services into industries including but not limited to: coffee & tea, clothing, outdoor recreation, shooting, and vitamins and supplements.

Each business profile provides information about the business, such as its location, a description of services and/or products provided by such business, and, in many cases, contact information and a PSQ-specific discount code, if applicable. Users are able to purchase products, bookmark favorite businesses, and share business profiles.

A link to each business’ website, when available, is also provided to facilitate ease of shopping by interested consumer members if the business is not set up for e-commerce capabilities. 2 Our Business Model Digital Advertising — We currently generate revenue from digital advertising fees from both local and national advertisers.

Business members advertising on the Platform pay monthly or purchase certain items a la carte to advertise, with a tiered pricing system. By advertising their services on PSQ, business members can increase their exposure to users on the Platform.

All advertisers we conduct business with are listed on the Platform and are required to affirm that they respect our five core values.

Business to Business (“B2B”) Revenue — Through a B2B initiative that we are in the process of further developing, we currently collaborate with multiple business members on the Platform that primarily serve other business members through revenue sharing arrangements pursuant to which we receive referral fees in the form of commissions based on the dollar amounts of transactions between the business members we connect through our B2B referral initiative.

The business members with which we have such relationships currently include, but are not limited to telecommunications, recruiting services, and business and marketing services. We vet these members for quality and values-alignment by researching the business members through publicly available data to assess their public reputation.

We then refer them to our business network and either receive fees representing a percentage of the revenue earned by our business members through the relationships that we facilitate or place their advertising in an email distributed to PSQ business members.

E-Commerce Transactional Revenue — We launched e-commerce capabilities on the Platform in November 2023, which provide in-app shopping capabilities with discounts for the PSQ community. The Platform allows consumer members to purchase products and services provided by business members directly on our app and further facilitate and ease their experience, from which we realize transaction-based revenue fees.

Direct to Consumer (“D2C”) — We are also in the process of developing networks and relationships to facilitate future direct-to-consumer sales of products which we expect to offer to consumer members through the Platform under our own brands (including our EveryLife brand name).

We believe that the level of consumer member demand observed based on utilization of the Platform to date suggests that there is untapped potential to create and sell our own branded products to our customer base, and the success of EveryLife is proof.

We believe that our existing (and growing) consumer member base represents an opportunity for us to reach and sell branded products with minimal marketing spend due to our established primary customer acquisition channel on the Platform directory. We launched our first D2C product, disposable diapers and wipes, in July 2023 under our pro-family “EveryLife TM ” brand.

Our Constituents and Engagement Consumer members/users Our consumer members are like-minded Americans who desire to discover and support business members that share their values.

As of December 31, 2023, on the Platform we have more than 1.6 million active consumer members (defined as unique consumer membership accounts for which we have received all required contact information and which have not been deactivated or deleted since our reception) and more than 75,000 business members from a wide variety of industries. 3 Business members The business members that choose to participate on the Platform are required to affirm that they agree to respect our five core values.

As of December 31, 2023, over 75,000 business members have joined the Platform and our MoM business growth rate (as measured the number of business members that have joined the Platform as of the last day of each month) was 13% for the period from July 1, 2022, through December 31, 2023.

Business members listed on the Platform directory come from a diverse group of industries, including but not limited to retailers and other merchants, restaurants, banks and service providers.

Advertisers While it is free for a business to sign up for the Platform, during the signup process, business owners are asked if they would like to increase their exposure throughout the Platform by purchasing paid advertising.

Our monthly advertising packages are offered at different price points depending on the selected features including but not limited to: category promotion, promoted products, ad placements on the “Shop” tab, push notifications, and email advertising to our consumer members. Brand Customers EveryLife’s key demographic comprises mothers in their early thirties, navigating parenthood with multiple children.

These moms are fervent about supporting companies that mirror their values, placing a strong emphasis on family priorities. In response to a growing discontent with baby brands supporting abortion and progressive causes, EveryLife emerges as a solution, filling a significant market gap.

D2C Brand Overview EveryLife is a direct-to-consumer baby care company founded in 2023 with a mission to provide premium products to every miraculous life. Every baby is considered a gift from God and deserves love, protection, and celebration. EveryLife is committed to its core values, ensuring product quality, and demonstrating generosity by donating diapers and wipes to moms in need.

This commitment has quickly set EveryLife apart, elevating both its brand and products. Since its launch in July 2023, EveryLife has been delivering high-performing and price-accessible products that align with the values of our consumers. Our Products and Services ● Diapers: EveryLife’s diapers use high-performance flow channel technology for faster absorption and 12-hour leak protection.

EveryLife diapers are carefully made to limit and eliminate harsh chemicals to help protect baby’s developing brain and body. EveryLife’s diapers are made without fragrances, dyes, lotions, latex, parabens, phthalates, or elemental chlorine . ● Wipes: EveryLife’s baby wipes are made with 99% purified water and with only five, clean ingredients.

EveryLife baby wipes are made without harsh chemicals, alcohol, fragrance, parabens, dyes, lotions, PEG ingredients, or plastics. ● With EveryLife’s auto-renew service, parents can have their premium products delivered to their doorstep every month. With a simple text, parents can edit, pause, or cancel their orders at any time, providing the ultimate experience of convenience.

Customers and Markets EveryLife’s key demographic comprises mothers in their early thirties, navigating parenthood with multiple children. These moms are fervent about supporting companies that mirror their values, placing a strong emphasis on family priorities. In response to a growing discontent with baby brands supporting abortion and progressive causes, EveryLife emerges as a solution, filling a significant market gap.

The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business, results of operations and financial condition could suffer.

In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of shares of our Class A Common Stock or Warrants and result in a loss of all or a portion of your investment: ● We may not continue to grow or maintain our base of consumer and business members or advertisers and may not be able to achieve or maintain profitability. ● Our recent and rapid growth in platform participants may not be sustainable or indicative of future performance. ● The market for the Platform and services may not be as large as we believe it to be, presently or in the future. ● We have limited experience with respect to determining optimal prices and pricing structure for our products and services, which may impact our financial results. ● Our business faces significant competition, and if we are unable to compete effectively, our business and operating results could be materially and adversely affected. ● The anticipated expansion of our operations, including in areas not part of our current operations, subjects us to additional risks that can adversely affect our operating results. ● Our business depends on hiring, developing and retaining highly skilled and dedicated employees, and any failure to do so, could have a material adverse effect on our business. ● Consumer tastes and preferences change over time and from time to time, as may public perception of us, which could be adversely affected by any negative publicity or reputational effects attributable to us or any of our affiliates or Outreach Program participants, which may impact our consumer and business members’ desire to utilize the Platform and materially affect our business and operating results. ● If we cannot maintain our company culture as we grow, our success, business and competitive position may be harmed. ● Our success depends on establishing and maintaining a strong brand and active engagement by business and consumer members and advertisers on the Platform, and any failure to establish and maintain a strong brand and member base, or adverse change in advertisers’ willingness to pay for advertising on the Platform, would adversely affect our future growth prospects. ● Our five core values may not always align with the interests of our business or our stockholders. ● Any failure by us to attract advertisers or any change in or loss of relationships with our existing advertisers or the amounts advertisers are able or willing to spend to advertise on the Platform could adversely affect our business and results of operations. 13 ● If member engagement by business or consumer members on the Platform fails to increase or declines, we may not be able to maintain or expand our advertising revenue and our business and operating results will be harmed. ● Changes to our existing platform and services could fail to attract engagement by consumer and business members with, or advertising spending on, the Platform, which could materially affect our ability to generate revenues. ● We may not be able to able to expand into or to compete successfully in one or more of the highly competitive business areas in which we anticipate expanding, including e-commerce and the B2B market, or recently expanded into, including the D2C market that we recently entered into with our launch of EveryLife in July 2023. ● We are subject to payments-related risks. ● Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition. ● We may in the future make acquisitions, and such acquisitions could disrupt our operations, and may have an adverse effect on our operating results. ● We are or may be subject to numerous risks relating to the need to comply with data and information privacy laws. ● We are subject to cybersecurity risks and interruptions or failures in our information technology systems and as we grow, we will need to expend additional resources to enhance our protection from such risks. ● Management identified a material weakness in our internal control over financial reporting as of December 31, 2023.

If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results. ● If we fail to adequately protect our proprietary intellectual property (“ IP ”) rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights. ● Our business depends on continued and unimpeded access to our directory information and services on the internet, which in turn relies on third-party telecommunications and internet service providers. ● We may be unable to successfully grow our business if we fail to compete effectively with others to attract and retain our executive officers and other key management and technical personnel. ● The consumer finance and buy-now-pay-later (“BNPL”) industry has become subject to increased regulatory scrutiny, and Credova’s failure to manage Credova’s business to comply with new regulations would materially and adversely affect Credova’s business, results of operations and financial condition. ● Credova’s results depend on prominent presentation, integration, and support of its platform by its merchants. ● Current and future government regulations may negatively impact the demand for Credova’s merchants’ products and Credova’s operations and financial results. ● We may be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures. ● Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business. ● The consumer finance and BNPL industry is subject to various state and federal laws in the United States and federal law concerning consumer finance, and the costs to maintain compliance with such laws and regulations may be significant. ● Compliance obligations imposed by new privacy laws, laws regulating social media platforms and online speech in the U.S., or industry practices may adversely affect our business. ● We are a “controlled company” within the meaning of NYSE listing standards and comply with reduced corporate governance standards as a result. ● Natural disasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt our business schedule. ● We may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms or at all. 14 Risks Related to Our Financial Performance and Operation Risks Related to Our Business We have a very limited operating history, which makes it difficult to evaluate our business and prospects.

We have a very limited operating history, which makes it difficult to evaluate our business and prospects or forecast our future results. We are subject to the same risks and uncertainties frequently encountered by new companies in rapidly evolving markets.

Our financial results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: ● market adoption of the Platform; ● our ability to maintain and grow the Platform offerings, traffic, and engagement; ● our ability to attract and retain consumers and business members and advertisers; ● the success of our Outreach Program; ● the amount of advertising we can attract to the Platform and the pricing of our advertising products; ● the diversification and growth of our revenue sources beyond current sources, including our ability to successfully launch new products and realize revenues from increased e-commerce functionality on the Platform, including through consumer transactions executed in the Platform, and through the sale of our own D2C branded products; ● our ability to grow and generate revenue from our B2B offerings once launched; ● the development and introduction of new products, or services by us or our competitors; ● increases in marketing, sales, and other operating expenses that we may incur to grow and expand our operations and to remain competitive, and increased expenses we have incurred and will continue to incur as a public company; ● legislation and regulation that forces us to change our content policies and practices (including those relating to our products, services and advertisements of our business members); ● our ability to maintain and increase operating margins; ● system failures or breaches of security or privacy; ● competition in the markets in which we operate, and our ability to successfully compete; and ● negative publicity we may encounter as we seek to grow our values-focused business.

To date, we have not generated significant revenues or achieved profitability, and may never generate significant revenues or become profitable. We have incurred net losses since our inception, and we may not be able to achieve or maintain profitability in the future.

We incurred net losses of $53.3 million and $7.0 million for the years ended December 31, 2023 and 2022. We generated revenue of $5.7 million and $0.5 million for the years ended December 31, 2023 and 2022.

Our expenses will likely increase in the future as we develop and launch new offerings and platform features, expand in existing and new markets, increase our sales and marketing efforts and continue to invest in the Platform, as well as a result of our becoming a public company.

Our efforts to grow our business may be more costly than we expect and may not result in increased revenue or growth in our business.

We may be required to make significant capital investments and incur recurring or new costs, and our investments may not generate sufficient returns and our results of operations, financial condition and liquidity may be adversely affected.

Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow on a consistent basis or at all.

If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition, results of operations and prospects could be adversely affected.

If we are unable to generate adequate revenue growth and manage our expenses, we may continue to incur net losses in the future, which may be substantial, and we may never be able to achieve or maintain profitability.

We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase. In particular, we intend to continue to expend significant funds to further develop the Platform.

We will also face increased compliance costs associated with growth, the expansion of our business and consumer member base, and being a public company.

Our efforts to grow our business may be more costly than we expect, or the rate of our growth in revenue may be slower than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.

We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications or delays, and other unknown events.

If we are unable to achieve and sustain profitability, the value of our business may significantly decrease. 15 We believe there is a significant market opportunity for our business, and we intend to invest aggressively to capitalize on this opportunity.

These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow.

Furthermore, if our future growth and operating performance fail to meet investor or analyst expectations, or if we have future negative cash flow or losses resulting from our investment in acquiring platform consumers and businesses or expanding our operations, this could have a material adverse effect on our business, financial condition and results of operations.

We cannot assure you that we will ever achieve or sustain profitability and may continue to incur significant losses going forward. Any failure by us to achieve or sustain profitability on a consistent basis could cause the value of our Class A Common Stock and Private Warrants to decline.

Inflationary pressures, particularly in the United States, could have a material adverse effect on our business, cash flows and results of operations. The U.S. economy is currently experiencing a bout of inflation, in part due to a collision of booming demand with constrained supply, forcing prices to rise. To combat inflation, the U.S.

Federal Reserve as well as counterparts in other countries have made a series of aggressive interest rate hikes commencing in 2022 and extending into early 2023 in an attempt to cool global economies. Inflation did not have a significant impact on our results of operations for the years ended December 31, 2023 and 2022.

We anticipate a material increase in cost of sales – services and cost of goods sold for at least the remainder of 2024, if not longer. We may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms or at all.

Since our inception, we have financed our operations and capital expenditures primarily through equity investments. In the future, we could be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business.

In addition, inflation rates in the U.S. have been higher than in previous years, which may result in higher costs of capital and constrained credit and liquidity. The Federal Reserve has raised, and may again raise, interest rates in response to concerns over inflation risk. Increases in interest rates could impact our ability to access the capital markets.

We may sell equity securities or debt securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, our current investors may be materially diluted.

Any debt financing, if available, may involve restrictive covenants and could reduce our operational flexibility or achieve profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures and consumer member demand.

Item 2. Properties Our headquarters are currently located in West Palm Beach, Florida, consisting of approximately 7,053 square feet of office space, and our mailing address there is 250 S. Australian Avenue, Suite 1300, West Palm Beach, Florida 33401. We relocated our headquarters to Florida from California in April 2023. Our lease for this facility expires in January 2025.

We continue to maintain approximately 6,881 square feet of office space in California. A number of our employees work remotely across the United States. Our facilities, which are leased, are adequate to meet our current needs though we intend to procure additional space in the future, if and as necessary, as we continue to add employees and expand our business.

For D2C products we have introduced and may introduce in the future, we rely and continue to expect to rely on third party contract manufacturers and not be required to acquire or lease our own manufacturing or other facilities.

Holders As of March 12, 2024, there were 50 holders of record of our Class A Common Stock, one holder of record of our Class C Common Stock and six holders of record of our Public Warrants.

It is the present intention of our Board to retain all earnings, if any, for use in our business operations and, accordingly, our Board does not anticipate declaring any dividends in the foreseeable future.

Securities Authorized for Issuance under Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.

Unregistered Sales of Equity Securities In 2023, we did not sell any shares of stock that were not registered under the Securities Act of 1933, as amended, other than those sales previously reported in a Current Report on Form 8-K. 63 Item 6. [Reserved]

This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” included elsewhere in this report.

Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “PSQ,” “we,” “us,” “our,” and the “Company” are intended to refer to (i) following the Business Combination, the business and operations of PSQ Holdings, Inc. and its consolidated subsidiaries, and (ii) prior to the Business Combination, Private PSQ (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.

Overview PSQ is a values-aligned platform where consumers with traditional American values can connect with and patronize business members whose values align with their own. PSQ is free-to-use for consumer members, who can use its platform to search for and shop from values-aligned business members both locally, online, and nationally.

Since our nationwide launch in July 2022, we have become the largest values-aligned platform of pro-America businesses and consumers.

We incorporated PSQ Holdings, Inc. in February of 2021, began development of our digital platform (mobile app and website) in May 2021 and launched our initial product regionally in San Diego County, California in October 2021 on iOS, Android and on our website.

After 10 months of testing in various markets and courting member feedback, we launched the Platform nationwide on July 4, 2022.

As of December 31, 2023, on the Platform we have more than 1.6 million active consumer members (defined as unique consumer membership accounts for which we have received all required contact information and which have not been deactivated or deleted since our reception) and more than 75,000 business members from a wide variety of industries.

On February 23, 2023, PSQ completed a stock-for-stock transaction to purchase 100% of the outstanding shares of EveryLife, Inc. (“EveryLife”), a Delaware corporation, in exchange for 1,071,229 shares of common stock, par value $0.001 per share, of Private PSQ (“Private PSQ Common Stock”). The mailing address of PSQ’s principal executive office is 250 S.

Australian Avenue, Suite 1300, West Palm Beach, Florida 33401. Recent Developments On March 13, 2024, the Company entered into a note purchase agreement for a 9.75% private placement convertible note for $10,000,000 invested by a board member and his affiliates. Terms for the note were priced based on notes exchanged as part of the Credova transaction.

The funds are currently held in escrow and the investment is subject to stockholder approval of the issuance of the underlying shares as part of the Company's annual shareholder meeting. 64 Credova Merger Agreement On March 13, 2024 , the Company entered into an agreement and plan of merger (the “Credova Merger Agreement”) with Cello Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub” and, together with PSQ, the “Buyer Parties”), Credova Holdings, Inc., a Delaware corporation (“Credova”), and Samuel L.

Paul, in the capacity as the Seller Representative in accordance with the terms of the Credova Merger Agreement (“Credova Merger”). Credova assists consumers, lenders, and retailers in offering point-of-sale financing products.

Credova has developed and maintains an internet-based proprietary retail finance platform and related application programming interfaces (“APIs”) through which Credova, certain FDIC and NCUA insured financial institutions, and other financial institutions authorized by Credova (each a “Financing Partner”), and merchants can dynamically offer certain financing products (collectively, the “Services”).

Pursuant to the Credova Merger Agreement, on March 13 2024, the transactions which are the subject of the Credova Merger Agreement were consummated (the “Closing”) and Merger Sub merged with and into Credova (the “Merger”), with Credova surviving as a wholly-owned subsidiary of PSQ.

In connection with the Merger, each share of Credova was converted into the right to receive newly-issued shares of our Class A common stock (“Class A Common Stock”), delivered to the Credova stockholders at the Closing (“Credova Stockholders”). As consideration for the Merger, Credova stockholders received 2,920,993 newly-issued shares of Class A Common Stock (the “Consideration Shares”).

A number of Consideration Shares equal to ten percent (10%) of the Consideration Shares (the “Escrow Shares”) was placed in an escrow account for indemnity claims made under the Credova Merger Agreement.

Assuming they are not subject to indemnity claims, the Escrow Shares remaining in escrow upon the 12-month anniversary of the Closing will be released and distributed pro rata to the former stockholders of Credova.

Prior to the execution of the Credova Merger Agreement, Credova, PSQ and certain holders of outstanding subordinated notes (“Subdebt Notes”) issued by Credova (the “Participating Noteholders”) entered into a Note Exchange Agreement (the “Note Exchange Agreement”) pursuant to which, immediately prior to the Closing, the Participating Noteholders delivered their subdebt notes of Credova for cancellation,, in exchange for newly-issued replacement notes issued by PSQ, convertible into shares of Class A Common Stock (the “Replacement Notes”).

The Replacement Notes have 9.75% simple interest per annum and ten-year maturity dates.

Pursuant to the terms of the Replacement Notes, at any time after the Closing, Participating Noteholders may elect to convert their Replacement Notes into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the outstanding principal amount of the Replacement Note to be converted plus accrued and unpaid interest by (y) 4.63641, subject to adjustment for stock splits and other similar transactions (the “Conversion Price”).

At any time, the Company may call the Replacement Notes for a cash amount equal to accrued interest plus (i) between the Closing and the first anniversary of the Closing, 120% of the then outstanding principal amount, (ii) between the first anniversary and the second anniversary of the Closing, 105% of the then outstanding principal amount and (iii) after the second anniversary of the Closing, the then outstanding principal amount of the Replacement Note.

Further, the Replacement Notes permit the Company, in its discretion, to require conversion of the Replacement Notes into shares of Class A Common Stock if the daily volume-weighted average trading price of the Company Class A Common Stock exceeds 140% of the Conversion Price on each of at least ten consecutive trading days during the twenty trading day period prior to notice of such required conversion.

The Credova Merger meets the criteria to be accounted for as a business combination and will be accounted for using the acquisition method of accounting, with the Company being treated as the accounting acquirer.

Under the acquisition method of accounting, the assets and liabilities of Credova and its subsidiaries will be recorded at their respective fair values as of the date of completion of the Credova Merger and added to the Company’s and the difference between the fair value of the consideration paid for the acquired entity and fair value of the net assets acquired will be recorded as goodwill.

We have not yet completed the purchase accounting for the Credova Merger, including determining the preliminary fair value of the assets acquired and liabilities assumed.